Kathy Jackson slush fund supported political allies

Nick McKenzie, Richard Baker

Health Services Union boss turned whistleblower Kathy Jackson ran a secretive union slush fund that used up to $300,000 in members’ money to help support the political and factional campaigns of her allies, including those from other unions.

Internal union banking records reveal $284,000 was transferred with Ms Jackson’s authorisation from her union’s main account into the “National Health Development Account” between 2003 and 2010.

"I have done nothing in relation to the fund that is criminal or that was not in the best interest of the union": Kathy Jackson. Photo: Josh Robenstone

Fairfax Media has confirmed that some of these funds were used to support Ms Jackson’s political allies, including officials from the Australian Workers Union, which was previously headed by federal opposition leader Bill Shorten.

The revelations provide further insight into the murky world of ALP and union fund-raising, in which slush funds have been commonplace and used for purposes such as supporting Labor factional players to win seats in Parliament.

Ms Jackson’s ties to the NHDA underline her complicated role as both union whistleblower and influential factional figure involved, by her own account, in the ALP’s “filthy” power plays.

Documents detailing the operation of the NHDA have been provided to the union royal commission.

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Fairfax Media has spoken to seven HSU committee of management members who served during that period and none said they had heard of the account. Long-time union members also said they had never heard of the account or its activities.

Leaked union records also show how Ms Jackson’s branch of the HSU made a $5000 donation in 2010 to senior Victorian Labor MP Marlene Kairouz and described it in a financial report as a payment to a charity.

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When regulator Fair Work Australia queried this payment with the HSU later in 2010, the union changed its description of it to a “fee for service”.

The $5000 was deposited in an ANZ bank account in the name of ‘AB Hinc’ - a Latin term which means ‘from here on’ - and which was an election fund controlled by Ms Kairouz.

Fairfax Media has confirmed the ‘AB Hinc’ account was never declared to the Australian Electoral Commission. Disclosure laws generally require election funds to be declared to the commission. ALP head office was also not told of its existence as required under Labor guidelines.

Ms Jackson’s whistleblowing on corrupt HSU union official Craig Thomson and her regular media appearances - including her recent comments backing the royal commission as a means to target ‘vampires’ sucking funds out of unions - have seen her gain national prominence and the support of Prime Minister Tony Abbott.

The royal commission is likely to examine the extent of disclosure of the NHDA’s operations and existence to the HSU members who unwittingly funded it.

“This sort of conduct has done incredible damage to the union movement. Members' money must be used in a transparent and accountable manner," said HSU branch secretary Craig McGregor, who in 2012 left his job as a radiographer after being elected to head the branch that Ms Jackson used to lead.

Mr McGregor said the review of the union's accounts to determine how members' money had been spent over the past decade had "nothing to do with politics and everything to do with ethics and democratic practice".

Fairfax Media is not suggesting Ms Jackson ever used members’ funds in a criminal fashion or for personal expenditure.

Ms Jackson declined to answer specific questions about the NHDA, saying she did not want to prejudice the work of the royal commission, which she is assisting. However, she provided a broad statement saying she never used money from the fund “for my own private benefit or for payment to third parties unless such payment was conscientiously believed by me and and relevant others to serve the legitimate political purposes of the union”.

“I say that I have done nothing in relation to the fund that is criminal or that was not in the best interests of the union as I genuinely believed them to be.”

Former HSU committee of management member Robert Matejin is one of seven branch committee members who said they could not recall ever being told of the NHDA.

“Members deserve to know what has happened to their money,” he said.

Kathy Jackson is listed on several banking documents as the person who authorised the movement of several thousand dollars from the union’s main bank account to the NHDA.

In seven years of HSU financial statements filed with regulators, the Australian Industrial Register or Fair Work Australia, the “NHDA” is only referred to once, in 2005. It is listed as an acronym and has no explanation of its purpose.

Leaked documents suggest there may have been an attempt inside the HSU to obscure the existence of the fund, with auditor accounts revealing an unknown person working for the HSU edited the spreadsheets to remove references to the NHDA.

The changes resulted in an accounting error in the 2006 financial statement, with $38,000 of members’ money sent to the fund removed from the final accounts.

Fairfax Media is not suggesting Ms Jackson was aware of any irregular accounting practices and was unable to contact the union’s auditor.